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OECD: A CONTROVERSIAL LIST

OECD: A CONTROVERSAL LIST

The G20 was held by the twenty most industrialised countries of the world on the 2nd of April 2009 in London. It had the intention to set out rules containing the most important achievements concerning the global near future and to foster the world economy. In addition, they set-out to restore worldwide financial stability, lead the international economic recovery and secure a sustainable future for all countries.


From the final Leader’s statement we can see that they have concretely set out some interesting rules such as art. 3 “ …we believe that the only sure foundation for sustainable organisation and rising prosperity for all is an open world economy based  on market principles, effective regulation, and strong global institutions…” and art. 8 “ …we are committed to take all the necessary actions to restore the normal flow of credit…”. G20 world leaders pledged to take actions against tax havens and other non- cooperative jurisdictions named on the OECD’s lists.

Given these emphatic and strong premises we were all expecting a strong revolution of all the financial markets. As reported above the OECD issued a list of countries divided in three categories, (click here for full list http://www.oecd.org/dataoecd/38/14/42497950.pdf ):

  • forty countries that have substantially implemented the internationally agreed tax standard;
  • thirty-five plus eight countries that have agreed  the internationally tax standard, but have not yet substantially implemented it;
  • four countries that have not committed to the internationally agreed  tax standard.
Switzerland and Belgium were clearly disappointed by discovering they have been included on the second list together with non-European countries. Nicolas Schmit, Luxembourg's Europe Affairs Minister, talked about a broken commitment, clamming that at the EU summit in March it was agreed that no European country should appear on the “black list”. In addition, the Austrian finance ministers as well as the Swiss government are not of a different opinion; they are respectively talking about hard trustable EU decisions and a deploring procedure in drawing up the list.

Reading this list carefully we can actually find other disappointing points. Incorporating companies in places such as Belize and Delaware it is quite easy and does not have a strong need for due diligence yet Belize is only reported in the second list and Delaware is not reported at all. As a result a political scientist at Australia’s Griffith University, Mr Jason Sharman, showed how easy it was to circumvent prohibitions on banking secrecy, forming anonymous shell companies and secret bank accounts across the world. The most egregious examples of banking secrecy, money laundering and tax fraud are found nowhere but in America. In countries and states such as Belize, Delaware, Nevada, Florida etc they do not ask the name of the company shareholder/s, nor do they routinely share the little information they have with the federal government. A study by the Internal Revenue Service found that 50-90% of the companies registered in one of these countries/states were already in breach of federal tax laws elsewhere. Consequently, with both anonymity and no taxation, America offers all the elements of a tax haven. It also reported that it is easier to open a bank account in these countries than apply for a driving licence. Mr Sharman has also reported that “In practice, OECD countries have much laxer regulation on shell corporations than classic tax havens and the US is one of the worst among the listed countries.”

Since this does not want to be an assault against the American’s company formation and banking system, it is important to understand what the G20 pledge really wants to bring instead. As Mr. Obama is the main leader and supporter of a collecting agreement that would eventually rebuild the world’s financial architecture, it is not clear why American states like Delaware, Nevada, Florida, Arkansas are not even mentioned on the OECD’s list and why we have seen European Countries reported on the list when, allegedly, they should have not been there.
By Jenny Suprani
Business Consultant